Berger Paints India Limited (509480) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '21 Results Call of Berger Paints India Limited hosted by Emkay Global Financial Services. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ashit Desai of Emkay Global. Thank you, and over to you, sir.

Yes. Thanks, Aman. Good afternoon, everyone. We would like to welcome the management of Berger Paints and thank them for giving us this opportunity. From the management, we have Mr. Srijit Dasgupta, Director, Finance and CFO; and Mr. Sujyoti Mukherjee, Vice President, Finance and Accounts. I would now hand over the call to the management for the opening remarks. Over to you, Srijit.

Thanks, Ashit. Good afternoon, ladies and gentlemen, and a very warm welcome to the Berger Paints India Limited Q1 FY '21 Earnings Call. I hope everybody is keeping well and staying safe. As usual, I'd like to start by sharing the growth numbers for both stand-alone and consolidated operations. BPIL stand-alone, the growth for total income from operations was negative 47.9%, PBDIT was negative 60.2%, PAT was negative 69.7%. BPIL consolidated numbers look like this: total income from operations down by 45.8%, PBDIT down by 69.4%, and PAT down by 91.4%. My comments on the Q1 FY '21 performance are as follows: I'll start with the stand-alone operations. As could be expected, the Q1 FY '21 numbers, of course, reflect the tremendous impact that the lockdown, combined with the pandemic-related response and reaction amongst consumers, retailers and painters, have had on demand and business operations. April, which is traditionally a very good month for us, particularly for our deco business, was almost completely washed out. This, of course, had a more than apparent effect on the numbers. This skewness is not apparent from the quarterly results, but this does affect us. Certainly in the last few years, April has been very good for us, so it hit us really hard to have April completely washed out. However, it was heartening to note that with the withdrawal of the lockdown in most parts of the country, demand and business activities started coming back to normal levels within a very short time. The rebound in the Tier 2 and Tier 3 towns was quicker as compared to Tier 1 and metros. Hopefully, with the recovery in the larger cities and towns, the sales will be shored up even more going forward. A note of caution, however. Many states continue to have sporadic lockdowns, a response to the peaking fresh case numbers, and this may impact the demand scenario to some extent going forward. The industrial businesses, which have slowed down over the last year, continued to remain impacted through Q1, and this, of course, pulled down the overall performance, both in top line and profitability. The raw material input costs remained fairly benign, though the drop in prices of crude derivatives were offset to a large extent by the depreciating rupee. And the overall gross margins remained at the same levels as they were in Q1 FY '20. On a more optimistic note, the slowdown in business, particularly in April and first part of May, gave us the opportunity to refocus our energies towards cost reductions in both raw materials and overheads. The effect of raw material reductions is likely to be felt in subsequent quarters since production and sales were much lower in Q1, for obvious reasons, and inventories as at end March need to be exhausted for the cost reductions in RMC to hit the P&L. We could also make some significant gains in expenses, mainly renegotiating existing contracts, some scale effect, very clearly apparent, and of course, some formulation gains which will hit the RMC going forward. In terms of the consolidated performance, the consolidated numbers performance in both top line and profitability was affected by the performance of BJN-Nepal and SBL Specialty Coatings Private Limited, the erstwhile Saboo Coatings. Nepal had only approximately 10 working days in the entire quarter and with the obvious consequence on top line. However, the good news is that the operations are coming quickly back to normal, and it is expected that going forward, there should be significant improvement, particularly leading up to the festive season. So hopefully, much better results in Nepal going forward. The performance of SB SCPL, Saboo Coatings as it was known earlier, is also improving significantly. So good news on those 2 fronts, which were really the spoilers for the first quarter. The profit numbers in the consolidated performance were also impacted by the mark-to-market foreign exchange fluctuation loss on account of outstanding ForEx loans in BPOL Russia's books. This is our subsidiary in Russia. The ruble has appreciated subsequently, and this will result in a partial reversal of these losses in the subsequent quarter. Just to remind listeners that we follow the calendar year, and this Q1 results consolidated incorporate the January to March results. So the [indiscernible] of April to June is known as far as the exchange rates are concerned. This was possible because the company's Polish subsidiary, the subsidiary in Poland, Bolix, showed improvement in both top line and profitability. This was a bit of good year for us. Everything else was struggling for various reasons. But this was possible, the performance in Poland was possible, because the company is in the business of external insulation products, the application of which is on external surfaces of buildings. The application work on building sites could continue during the lockdown since this posed very little risk to the occupants of the building. They were not in contact with the applicators and work would continue. So this was a bit of a pragmatic approach taken by the Polish authorities and allowed work to continue. So this is a little bit about the performance in this quarter. Hopefully, going forward, we'll see much better results. I now invite questions from the participants in the call.

[Operator Instructions] The first question is from the line of Abneesh Roy from Edelweiss.

My question is you have seen a good recovery in June. Other companies in the space, in the consumption broader space and in the paints are seeing in July also, it has -- the June recovery has sustained. I'm not saying accelerated, it has sustained. And August also looks reasonable. So would you also give some comment? I know you don't make some comment on the numbers on the future, but some qualitative comments you can make on July and August.

Yes. I think it's possible to say that the recovery kind of sustained. I can't give you exact numbers. But the anxiety that May or June were temporary pent-up demand-related phenomenon, I think that was sort of as much to a large extent. So yes, we feel optimistic going forward.

Sir, in terms of cost, Q1 had some exceptional costs, so either in terms of the insurance you were providing to the -- wherever required or to the distributor support, dealer support or even in terms of logistics costs, some of these, have they started reversing already in July, August?

See, the scale-related costs, obviously, the benefits won't stay, but some are quite permanent. For example, traveling, for better or for worse, I think that those days of very heavy traveling are not going to be with us for some time. Of course, expenses like power and fuel, stores, consumption, these are scale- and operations-related. And as things pick up, of course, we won't see the benefit of that going forward. But they are one-off negotiated reductions that were made by going back to pretty much every service provider and sort of getting discounts and efficiency-related sort of discounts from them. So some decent work has been done, the benefit of which should be seen through to subsequent quarters. But obviously, the scale-related expenses reduction won't be sustained when the operations come back to normal.

Sir, last question. DIY-India has been very limited till now in this category. But globally, you see a lot of the advanced markets are having huge component of DIY. Now in India, also, we have seen some of the paint companies start this -- a few companies have been doing for a long time. In your case, if you could tell us what are the plans. Do you see this becoming big for the industry 5 years down the line?

Yes. I think every company has started in a small way. It will take -- in my view, it will take some time for it to be a significant number. So I don't see it sharply affecting the growth numbers yet. But it is the way of the future in all other countries. So little by little, I think, definitely, this country will follow suit, but not for a while. But as you say, some of these products are already launched, and there will be a niche market for them.

The next question is from the line of Avi Mehta from IIFL.

Sir, I had just 2 questions. One was on the input cost. You said there was high-cost inventory for input costs. Could you quantify this amount?

I think I'll have to clarify my statement, Avi. I don't say high cost. I said the inventory, which was procured at higher costs in March, for example, did not -- obviously, that will have to be exhausted and consumed in production before further gains in raw materials, which were negotiated with raw material suppliers, will actually kick in. So we have made some gains in terms of negotiating fresh rates, COVID discounts, if you like, for want of a better description, because everybody was struggling, and we said that let's try and negotiate better. This is an opportunity to go back to vendors. These are extraordinary times. But for those rates and purchase orders to actually filter through the supply chain and reach the sales will take a little time. I suspect that Q2, we should be seeing the benefit of all of this.

Okay. And sir, if I were to consider those [indiscernible] rates, just to kind of file the -- at current prices, would it be fair to say that we will be moving back to 4Q levels? Is that a fair number to kind of broadly look at, not an exact number, but...

As you know, we don't predict numbers, but I can tell you that it will have to be matched up against the moving crude oil prices and the rupee versus dollar. So all of that will have to be kind of kept in mind. Of course, there's some competition in the field as well in terms of discounts on certain products. So all of those kind of affect the ultimate outcome. But you're right, if everything else was the same, this would come through in subsequent quarter.

Okay. And second, sir, the ruble depreciation that you saw made a massive impact, now clearly that has reversed. Would you be able to help us understand what kind of quantum was this so that we can calculate the [indiscernible]

These numbers are not in the public domain, Avi, so I can't give you exact numbers, but I should clarify that it is partially reversed, not fully, but partially reversed. But if you look at it, there was a dent in our numbers in Q1, there will be a benefit in the numbers in Q2, if that helps you.

And where would this be reflected, sir? In the other expenses?

Yes. This is -- these are reported in the other expenses category.

And lastly, sir, clearly, there is -- you have pointed towards there being a mix impact as well in the quarter. Would you be able to share -- clarify whether this mix impact is something that you are continuing to see and what exactly you mean by this?

These are product mix effects, so largely, the effect of selling a little lower-margin products going forward.

What you are talking about, sir?

See, these are the low-end products, essentially putties, distempers, maybe solvent-based primers. These are -- we went ahead with the logic that because we suffered in April, and I gave you the reasons, we wanted to claw back as fast as we could and pretty much sold everything we could. And we are not defending that decision, we are -- we thought that was a good thing to do and -- because we were affected by the April phenomenon.

And sir, this mix change is something that has sustained because of the way demand is or no? You -- it was more self-driven, so it has kind of reversed back. If you could kind of [indiscernible]

I wouldn't like to comment going -- about the situation going forward, but I would expect it to normalize to industry levels.

Okay. And sir, the last one, is there any change in the discounting levels on the ground? I mean have you seen higher reduction in promotions happening in [indiscernible]

Sure, sure, and certainly in the products that were selling, which were the solvent-based products were selling. So of course, there were discounts, and I think that's true for all players.

And has there been a moderation, sir? Because there's been a very healthy trajectory, I mean especially the way you've ended the quarter. I mean given that April was lost completely and the rest of the quarter has been -- it seems to have been [indiscernible]

Again, I wouldn't like to comment on immediate quarters following the first quarter. So -- but I would expect things to normalize a little bit. Of course, demand and lockdown situation sort of resolving themselves.

The next question is from the line of Tejash Shah from Spark Capital.

I hope you all are keeping safe. Sir, 3 questions from my side. Sir, first, looking at the environment in terms of demand and economy at large and then looking at the gross margin benefit or raw material benefit that you spoke about, do you think that the industry at large and Berger in particular will have to take pricing interventions to revive demand?

Not so far. We expect that the situation will not get net-net worse than it is now. As I mentioned in my earlier comments, that a little bit of mix effect has really affected perhaps our gross margins to a little extent or to a moderate extent. Going forward, we expect it to normalize. I don't think anybody is looking at price corrections just now. Of course, rebating and discounting on the field a little bit will happen if things get -- or we are disappointed with the demand scenario. But I don't want to go into all of that. I don't see any immediate price corrections happening.

Sir, pipeline inventory with dealers and distributors, is it less than average? Or is it normalized?

I think it would have normalized. Yes, there would have been a spurt of building up stocks perhaps in May, but it's been a while since then. And I think the sustained demand would imply that there are no significant pipeline stocks.

Sir, second question is -- this is based on anecdotal evidences that we have. But enamel seems to be -- at least in the last quarter, seems to have bounced back. So I didn't know if that's true for Berger as well or not, but is this -- was this -- first, did you see the trend of enamel bouncing back? And was this much more tactical or structural in some form?

Depends what you would classify as bouncing back, Tejash, because they did sell well, but it's not something that will upset the overall mix or be something really very, very significant to talk about. Yes, they did sell better than some of the -- as you can imagine, I mean it would sell better than interior emulsions because of the nature of the pandemic and the so-called fear factor and difficulties that painters face. So a little bit, yes, but I think it should normalize as the pandemic numbers drop.

Sure. Sir, lastly, other income had a sharp fall Y-o-Y both in standalone and consol. So what led to this fall? And along with that, is there any pressure points on collection from debtors or receivables?

No, not at all. A couple of big amounts. There was an income tax refund in the earlier quarter, so that was not repeated. I mean that happens, we don't get income tax returns on a regular basis. But that's one. Also, the dividend and interest income from investable funds had come down because, if you recall, we paid out a significant amount as interim dividend in March. So normally, the year-end surpluses, which would have been retained in the company in earlier years in fetching income, happened but happened to a lesser extent in this quarter. So these are -- if -- to answer your question, these are one-offs, which, hopefully, going forward, will be fine.

The next question is from the line of Ekta Sanghvi from Vallum Capital.

Yes. So I just wanted to ask what's the revenue contribution from powder coatings and protective coatings.

Protective coatings, typically -- I mean I'll give you rough numbers. These are not sharply defined in our accounting statements, but we have reported this earlier in earnings calls and in our statements, in our MD statements. Typically, protective coatings accounts for about 9% or 9.5% of our total revenue. And powder coatings is a much smaller proportion, at around a little less than 2%.

Also sir, since the coatings are the fastest-growing segments right now in coatings overall, what steps are we taking to gain market share in these -- in this category?

Sorry, which category of coatings?

Sir, these powder coatings, protective coatings, auto refinish and such other coatings.

Yes, but they are not clubbed together, Ekta. Powder coatings are typically a different technology, and it's overall, in India, much, much smaller segment than the liquid paints, both decorative and industrial. So there is a limited opportunity, but still very small numbers. In terms of the industrial coatings, I think you also mentioned some of the other industrial coatings. Those, of course, are segment by segment more significantly affected both by the pandemic and the general slowdown which persisted from last year. So that, I suspect, will take a little more time. We are not very largely exposed to this category of industrial coatings. Protective coating seems to have recovered or recovering a little faster than the others. So good news in that front because we have significant exposure in protective coatings. But in the other categories, of both liquid and -- which include, of course, automotive coatings, the recovery may be a bit slower.

The next question is from the line of Aniruddha Joshi from ICICI Securities.

Yes. Sir, the revenue growth on [indiscernible] business...

Your voice is not very clear, Aniruddha. Can you sort of -- I don't know how. [indiscernible]

Is it okay, sir?

Yes, a little better. Yes, go ahead.

Yes. Sir, what is the revenue growth in waterproofing, including STP?

See, these are not numbers we share, Aniruddha, so I can't tell you that. But [indiscernible], this is on the upswing and hopefully, going forward, will really be one of our front runners.

Okay. Okay. Sir, just indicative direction, any number will also do, what would be the revenue contribution of the products like putty, primer, waterproofing, all put together? Will it be exceeding 10% of sales or [indiscernible] will be less than that?

This is not something I can share, Aniruddha, no company will tell you this. For whatever good reason, I don't know. But I'm sorry, you'll have to bear with us. But I think it is fair to say that both the products that you've mentioned have shown decent growth.

The next question is from the line of Varun Singh from IDBI Capital.

Yes. Just wanted to understand that over the last 5 quarters, our standalone revenue growth has been lower to -- lower compared to the category leaders, I mean if you compare the standalone numbers. So 5 consecutive quarters of lower revenue growth compared to competition, how should we read these numbers? I mean, are we losing market share in decorative coatings?

To my understanding, no, the standalone number does include a significant portion of nondeco business, I think we mentioned this earlier, more so than the category leader. So that has to be understood. And as I mentioned in my remarks just a few minutes ago, industrial coatings have further been -- been further affected by the pandemic and its consequence demand fallout as compared to the other businesses. Already, I think, for the trailing 3 or 4 quarters, we had been seeing a decline in the fortunes of the industrial businesses. I mean, I don't need to mention the categories. But obviously, automotive and general industrial, consumer, durable-related OEs would have seen a drop-off in demand and a consequent impact on lower consumption of paint. So that has to be seen when comparing with the category leader. So the top line, as it stands, does not reflect apples-to-apples comparison. My take is that we would be pretty much at the same level in terms of growth rates. Market share, of course, is a different situation altogether. With their size, they would be getting -- they would have got slightly more gains, greater gains in market share than us. But we know and we feel that we would have got market share from some of the other players. So I think, overall, that has to be seen in context.

And on gross margin expansions and despite we having relatively lower or a higher amount of nonwater-based paint portfolio, our margin expansion has been lower compared to the category leader in 3 out of last 5 quarters consequently. So I mean, how would you -- I mean how should we read this?

Again, it's to do with the business line mix. Perhaps I should point out that deco water-based paints, particularly the higher-end emulsions actually fetch higher margins. So that has an impact. And of course, the falloff in terms of the protective coatings business, higher-end emulsions business, particularly in this quarter, have had their effect on margins. I did mention in answer to somebody else who posed that question, that there would be a product mix effect in Q1 at least, Q1 of FY '21.

The next question is from the line of Gaurav Jogani from Axis Capital.

Thank you for the opportunity. Sir, my first question is with regards to the employee cost.

Can I request you to please be a bit loud?

Yes, hello, am I audible now?

Yes.

Yes.

Yes. Sir, my first question is with regards to the employee expense in the standalone business. So that seems to have a risen a bit compared to Q4. So are there any one-offs in that state?

Not really. I think we are planning to reward and incentivize some of our employees, certainly the ones who perform. So I think a little bit of budgeted increase is taken into account, but this will only be kind of spent depending on the results we achieve. This is not, by any means a sort of fixed or committed expense.

Okay. Sure, sir. And sir, my second question is with regards to -- if you can give an indicated volume growth number for the quarter for decorative paint, sir.

I think this has been dealt with. Everybody, I would personally like to stay away from volume growth numbers mainly because the way we calculate volume doesn't do justice to the performance because everything is expressed either in metric tons or in sort of converted kiloliters and different companies have different bases. I would, like in earlier quarters, guide you towards looking at the value growth numbers and then adjusting for the price decreases which have happened in the trailing 10 months, that's about close to 2%, and come to your own conclusions. Because otherwise, it becomes a very, very difficult number to explain or defend because every company has their own system.

Sure, sir. Sir, so is there any price cuts that we have taken in Q1 in the deco space?

No, no price cuts. But as I mentioned earlier, there would have been some discounts and rebating in certain product categories.

[Operator Instructions] The next question is from the line of Shirish Pardeshi from Centrum.

Just two questions. I think we have seen the quarter which has gone by as there is a lot of disruption, and on top of it, we had floods now, which is running here. And so if you can just tell us how the demand condition looks. Primarily, the point is that the urban demand has completely vanished because of the lockdown and extended lockdown. But even rural also, we see the rain effect and even government doled out a lot of incentives to the rural. So do you really see that consumer sentiments in rural is going to be on upbeat and we will see more of down -- not down trading, but per se, demand for lower-end products higher in the next 2 to 3 quarters?

I think a bit of everything, Shirish. Certainly, the smaller towns, hopefully, will sustain the demand. And you're right, value-for-money products do tend to sell a little more during such difficult times. But we are expecting that, hopefully, once all the pandemic numbers peak and then the falloff happens, we are hoping that the larger towns and cities will also rebound back to a little -- to some extent. Of course, there will be states and towns and cities who will have sporadic lockdowns, and this will, of course, disrupt in a small way some of the sales in certain states. But by and large, I think things will kind of improve. And for sure, the rural demand would sustain. That's our view.

Okay. My related question is on the urban side. In the call, you mentioned there is a higher demand or probably there is a more skewness which is seen for the enamel. So is there a visible down trading which is happening in the urban market? And to what are you going to ascribe that?

[indiscernible] It has got more with the safety issue of allowing people to come in to paint. So that's so-called fear element is being sort of addressed and has been addressed. I think every company will tell you how they've addressed the so-called reluctance of consumers to get their houses painted, the perception of lack of safety and a possible exposure to the virus. So all of that has been addressed. And I think that element of resistance or fear factor, some people have called it, is disappearing slowly. And hopefully, the other products will come back to normal in terms of uptake.

Okay. So Q2, have a follow-up on that. You don't see there is a danger that enamel is taking share from [indiscernible]

No, no, no. Not in the medium to long term. It can't because the surfaces used for enamel are not that much. It's a temporary phenomenon and hopefully, everything else will sort itself out as the painting activity comes back to normal.

The next question is from the line of Kuldeep Gangwar from ASK Investment Managers.

Srijit, just a couple of questions. One, whether there had been any divergence in the regional pattern of the demand?

Well, not really. Other than the fact that there are some states which recovered from lockdown a little later, and so that would have a skewness in terms of sales in that particular region or state. But other than that, we are seeing pretty much everything is selling everywhere.

And recently, there had been concerns that COVID is reaching to hinterlands, Tier 3, Tier 4, which may have implication. So is it happening on ground or the, say, psychology is different in those regions?

I would not like to comment specifically about either July or August, but I can only say that the benefits of other factors, like good monsoon, recovery in some of the very heavily affected COVID states and cities will counterbalance whatever negative effect there is.

And last bit, like, how big the Russian operations are giving the swing of this kind? I do understand the ruble would have depreciated by 30% or so. But just wanted to know like how big those operations are given this sort of strength.

These are not fluctuations on operating receivables or payables. Basically, this is a loan that was used to fund their operations, which the parent company has given. And by accounting law, this has to be mark-to-market through the P&L if fluctuations happen. So I don't think this is a one-off. The ruble suddenly went from 60 or 61 to about 77. And that kind of -- this has not happened before. And again, it's reversed itself post 31st March. I had clarified the January to March numbers are incorporated in our Q1 numbers. So we know now that -- what the rate was in on the 30th of June. So -- and there will be a gain, not fully -- not compensating for the full amount, but surely a gain.

So basically you're saying that these things keep on happening, but the quantum was quite huge. So it's coming like a big number this time around.

Absolutely. I mean this has never happened before. This is really one-off. I think it had everything to do with the pandemic and Russia being one of the most affected places and business activity coming down and therefore the impact on the exchange rate.

The next question is from the line of Aditya Gupta from Goldman Sachs.

Just one question, please. So given the fact that the economy segment in the decorative side is growing faster than the other segments now, is that making a case for the volume growth, and this is looking beyond FY '21, to be at a higher rate compared to the GDP growth? Historically, paint volumes have grown around 1.4, 1.5x the GDP. But now that the economy segment is growing faster and the repainting cycle should be lower, does it make a case that going forward, on a 3-year basis, the ratio could move higher?

Yes, it does. But that's why I'd like to stay away from volume numbers because they can be quite misleading. You're right, so if you go strictly by the number of metric tons sold and you try to relate it to GDP, yes, the correlation would be higher or the factor would be higher. But I don't think one should dwell on that too much. It's really the net value sales, of course, adjusted by any price decreases or increases that we should be really looking at. And I think we are pretty much on the way to normalization there. As I said, there's a 2% impact of trailing price decreases in the trailing 10 or 11 months and that's had an impact on the volume value ratio. It becomes very difficult to piece together all the factors that impact the gap between volume and value, and I personally like to stay away from it.

The next question is from the line of Abneesh Roy from Edelweiss.

Sir, one...

Sorry, Abneesh, we lost your audio.

Yes, I think we lost him there.

Yes, sorry. Is it better now?

Yes.

Yes. Yes, sure. Go ahead.

Sir, one question on dealer expansion. So last 4 months, have you managed to add some dealers? And next 1 year, what -- will the pace of expansion be similar to what you've done average last 3 years?

Good question, Abneesh. Yes, we did add dealers. But as you can imagine, only in about 1.5 months out of the quarter of 3 months. So obviously, the overall numbers are much less than what we had budgeted originally prepandemic. But going forward, I think, we may not be able to restore the numbers fully in the next quarters, but -- by surely, by the end of the year, we will be back to normal levels of growth that is.

And the last year, you have added what -- how many, 2,000 dealers average?

More than that, yes. Typically, it will be about 12%, 12.5% of the existing number. Obviously, much less than that in the first quarter. That is as much as I can say.

And sir, on the industrial part of the business in auto, we are seeing good recovery in terms of the actual end users. So is that now getting reflected in your consumption to these industries also?

Two-wheelers, yes. I think passenger cars, small cars apart, it will still take a little time. Let's hope that things recover faster. The numbers are as they are. If people make vehicles, then, of course, they'll take paint from us.

And have you seen margin compression here, gross margin compression at least here or that cost-plus model [indiscernible] so that is true? Yes?

Not really because crude oil prices came down, so the artificially depressed margins and people were reluctant to give price increases in the environment of low demand. This has relieved a little bit. So actually, a little bit of expansion has happened.

And sir, last question. Many questions are asked on market share competitive. My question is more on qualitative side. Last 1 year, have you seen the market leader become more aggressive in anything in terms of, say, pricing or distribution or the commissions to the trade? Because there is a management at the top level. There is a change in the market leader. So are you seeing that also have ramifications in any of the competitive dynamics?

I think I won't comment on that one, Abneesh. Market leader has always been tough act to follow. And I think they continue to remain so. I think I'd stay away from any specific comment.

The next question is from the line of Ashit Desai from Emkay.

Just 2 small questions.

Yes, Ashit.

Srijit, you've talked about some formulation gains. Most paint companies have talked about this, this time. What exactly are these? And how often do we see these gains coming in?

This is a continuous program, Ashit. And everybody -- essentially, it stems from the fact that you either provide better properties for the same price or you kind of get a better margin for marginally increased properties or you do raw material substitution, get other vendors into play and, therefore, lower your raw material costs. So by doing a bit of everything, you kind of -- the R&D department or function has a role to play in improving margins. So this normally, in a steady state, is an ongoing situation. In this particular scenario where demand was depressed, sales were not picking up and there were the other factors, we gave special attention to crashing these development times to some extent and getting the returns and reductions a little quicker. I think every company has the time and the focus to do it, and this is what it is really.

Okay. Okay. And lastly, I don't know if you called out the CapEx figure for this year.

No, I didn't touch it. We are looking at revised numbers, and probably not something more than about INR 120 crores or INR 130 crores for the financial year. So a little bit of deferment -- no revision of plans, but a little bit of deferment in terms of timing of outflows.

[Operator Instructions] Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to the management for the closing comments. Thank you, and over to you.

Thank you all. I think -- thank you for your participation and your questions. You all know that it has been an unprecedented quarter for us. And hopefully, things will look forward going from here. We expect that, and we will come back to you as and when that happens. Thank you.

Thank you very much. Ladies and gentlemen, on behalf of Emkay Global Financial Services, that concludes today's call. Thank you all for joining us, and you may now disconnect your lines.